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IPTV, Next-Gen Television: The Operators

Posted on Wednesday, Oct 3rd 2007

By Mitch Berman, Guest Author

Previous Post: IPTV: Next-Gen Television?

There are 3 flavors of IPTV. This blog deals with the first and most prevalent definition… telco operators. AT&T U-Verse. Verizon FiOS. Second and third tier telcos like Surewest. We will not discuss “technology.” Technology to do video over IP is prevalent, growing and indisputable, although many different forms exist. Blogs authored in Silicon Valley tend to fixate on the enabling technology behind the delivery of IP video — whether it’s downloading, P2P or streaming. So-called IPTV companies using these various forms of video delivery rarely give any credence to competitive endeavors. Typically, they see only their own initiative as the lone winner. We’ll leave tech-talk to the engineers. Instead, we will focus on 3 important legs of the chair: Business Model, Content and Consumer Experience.

Although Europe and Asia tend to lead successful IPTV deployments, particularly in Hong Kong, Japan and South Korea, we will just be talking about the major IPTV leaders in the United States.

First, a couple of statistics: After more than 2 years since initial IPTV service launch, AT&T U-Verse recently reported approximately 40 thousand subscribers in parts of 5 states for its efforts. Verizon FiOS reported approximately 500 thousand subscribers in parts of 11 states. What do these numbers mean? Is the cable and satellite subscriber base at Comcast, DirecTV and Dish Network too hard to crack? Is the political and bureaucratic city by city franchising process an impediment to IPTV subscriber growth? Or, is the business model driven by content and consumer experience just not compelling enough to spur consumer adoption? The answer is probably a combination of all of the above.

The business model is moribund. It models the tried and true cable and satellite formats that are driven by ad sales and monthly subscription to over 100 channels of movies and sports. No real differentiation here. As we will discuss in future IPTV blogs, we believe the real driving force behind subscriber interest is the content and consumer experience.

Let’s look at content: There really is no compelling content differentiation on AT&T U-Verse and Verizon FiOS than what one can watch on Comcast and DirecTV. In fact, the content choice may not even be as robust. Combine that with a consumer experience (consumer interface) that is similar to what is already available on cable and satellite (grid TV guide), one asks the question… so, what’s new?

Bob Greene, senior vice president of advanced services for Starz/Encore Entertainment’s online endeavor “Vongo,” recently told an audience at the Next Generation Media Networks Symposium that, “The entertainment industry is entwined in a web of complicated and often exclusive licensing deals, and getting the right content will be a challenge. Breaking into these exclusive relationships is the biggest barrier to those who want to start delivering video content over IP.”

Therefore, since the IPTV consumer experience (consumer interface) and content presented by the telcos is merely “more of the same,” it’s not surprising that subscriber counts are irrelevant. When the telcos initially launched IPTV, they intended to compete with cable on “the triple play.” That is, provide consumers with a “package” that included high speed data, voice and video. The war was on. This week, AT&T made a bid for Dish Network, proving that IPTV’s content and consumer experience has not provided a compelling difference to date. Thus, “the war” has been about service and price. Ergo, some consumers do switch, largely based on regions where a particular cable operator or satellite service is deemed bad.

So, when one takes an objective view of “telco” delivered IPTV, analyzing it from the point of view of content and consumer experience, one asks… “Where’s the beef?” Unfortunately, the telcos are merely spending gobs of cash producing IP-based copycats of cable and satellite without a vision for what the future of IP video can deliver to consumers.

In the next segment of “IPTV: Next-Gen Television?,” we’ll take a look at another form of video over IP … independent set top boxes.

To be continued…

This segment is a part in the series : IPTV, Next-Gen Television


. The Operators
. The Box
. InternetTV

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